SCICOM (MSC) Bhd (-ve)

SCICOM (fundamental: 3/3; valuation: 2.1/3) gained 12 sen or 6.4% to RM1.99 since its 2QFYJun15 results announcement on Monday. For 1HFY15, net profit jumped 39.8% y-o-y to RM14.9 million on the back of higher revenue of RM85.5 million, due to higher billable headcounts and transactional volume for existing projects. Scicom specialises in providing customer contact management solutions to multi-national companies on long term contracts. The outsourcing services provider derives over 80% of its revenue from Malaysia and Singapore. Since listing in 2005, net profit grew at a 9-year CAGR of 17.6% to RM23.2 million in FY2014. Scicom has a debt-free balance sheet with net cash of RM27.1 million and a high ROE of 32.5%. The stock, however, trades at a relatively high trailing 12-month P/E of 24.9 times and 9.1 times book. After adjusting for bonus issue, dividends totalled 5.8 sen last year, giving a yield of 3.0%.

This article first appeared in The Edge Financial Daily, on February 12, 2015.